Curbs on duty-free items may force shops to rework pacts with airports

Mumbai: Restricting sale of liquor and cigarettes at duty-free shops at Indian airports may force the retailers to renegotiate existing contracts with the aerodromes, an industry source said.

Liquor imports account for almost 50 per cent of the overall duty-free sales of $450 million.

At present, an arriving international passenger is allowed to buy two litres of liquor and one carton of 100 cigarette sticks from duty-free shops.

The commerce ministry, has, however, proposed to reduce it to one litre and prohibit cigarette sales completely as part of recommendations to the finance ministry ahead of the union Budget. "As much as 70 per cent of our business is arrival sales and the rest 30 per cent at departures. So, if the proposal is accepted, it will really impact the business going forward and we will have to renegotiate the lease contracts with the airport operators," an industry source said.

Mumbai airport alone earns about Rs 400 crore annually as rentals from duty-free operators, he said, adding that any dip in sales will reduce the topline and consequently the affordability to pay higher rentals.